Justice Department Secures Agreement with Patriot Bank to Resolve Lending Discrimination Claims

WASHINGTON – The Justice Department announced today that Patriot Bank (Patriot) has agreed to pay $1.9 million to resolve allegations that the bank engaged in a pattern or practice of lending discrimination by redlining majority-Black and Hispanic neighborhoods in Memphis, Tennessee. Redlining is an illegal practice in which lenders avoid providing credit services to individuals living in, or seeking to live in, communities of color because of the race, color or national origin of the residents in those communities.

“This settlement embodies Dr. Martin Luther King Jr.’s commitment to promoting economic justice and ensuring that Black Americans and all communities of color are able to achieve the American dream, and equally access credit to purchase a home.,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “The Justice Department is dedicated to stamping out discriminatory lending practices across this country and we are vigorously committed to holding lenders accountable, no matter their size. This settlement will provide many Memphis families with access to credit that will improve the quality of their lives while opening up opportunities to build intergenerational wealth.”

“For too long, practices like redlining and discriminatory lending have been used to undermine the promises of our economic system,” said U.S. Attorney Kevin G. Ritz for the Western District of Tennessee. “Our office is committed to enforcing fair lending laws and ensuring that banks and lenders are providing communities of color equal access to credit and lending opportunities. This agreement with Patriot Bank signifies an important step toward preserving economic justice and for communities of color in Memphis as they buy homes, start businesses, and take part in the American Dream.”

The department’s complaint alleges, from 2015 through at least 2020, Patriot avoided providing mortgage services to majority-Black and Hispanic neighborhoods in Memphis and discouraged people seeking credit in those communities from obtaining home loans. Patriot’s home mortgage lending was focused disproportionately on white areas around the City of Memphis. Over the same six-year period, other banks received nearly 3.5 times as many loan applications compared to Patriot in majority-Black and Hispanic neighborhoods in Memphis. Even when Patriot generated loan applications from majority-Black and Hispanic areas, the applicants themselves were disproportionately white.  

Under the proposed consent order, which is subject to court approval, Patriot will invest $1.9 million to increase credit opportunities for communities of color in Memphis. Specifically, Patriot will:

• Invest at least $1.3 million in a loan subsidy fund to increase access to home mortgage, home improvement, and home refinance for residents of majority-Black and Hispanic neighborhoods;
• Spend $375,000 for advertising, outreach, consumer financial education and credit counseling focused on majority-Black and Hispanic neighborhoods;
• Spend $225,000 on community partnerships to provide services that increase residential mortgage credit access for residents of those neighborhoods;
• Ensure at least two mortgage loan officers are dedicated to serving majority-Black and Hispanic neighborhoods in the Bank’s service area;
• Employ a Director of Community Lending who will oversee the continued development of lending in communities of color; and
• Continuously assess the communities’ credit needs throughout the term of the consent order.

The department opened its investigation into Patriot’s lending practices after receiving a referral from the bank’s regulator, the Board of Governors of the Federal Reserve System. Patriot cooperated with the department’s investigation and worked with the department to resolve the redlining allegations.

In October 2021, Attorney General Merrick B. Garland and Assistant Attorney General Clarke launched the Justice Department’s Combating Redlining Initiative, a coordinated enforcement effort to address this persistent form of discrimination against communities of color. Since 2021, the department has announced 11 redlining cases and secured over $109 million in relief for communities of color that have been the victims of lending discrimination across the country.

Additional information about the department’s fair lending enforcement can be found at www.justice.gov/crt/fair-lending-program-0. Individuals may report lending discrimination by calling the Justice Department’s housing discrimination tip line at 1-833-591-0291, or submitting a report online.

View the complaint here.

View the consent order here.